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What Is 'Personal Research and Development (R&D)'?

A Personal R&D budget can provide you with guilt-free spending on anything that will improve your skills and capabilities.

R&D exists because it works. Investing in your personal skills and capabilities can enrich your life and open possibilities to additional income sources.

What would it look like if you set aside a small percentage of your income as a Personal R&D budget?

Josh Kaufman Explains 'Personal Research and Development'

Every successful business dedicates a certain amount of resources to trying new things. Research and Development (R&D) is what business leaders around the world count on to determine what the company should work on next.

Large companies spend millions (sometimes billions) of dollars in speculative research every year, experimenting with new techniques and processes in order to enhance their capabilities.

R&D exists because it works-companies that make research and development a priority often discover new products to offer their customers or process improvements that meaningfully contribute to the bottom line.

If it works for them, it can work for you.

What would it look like if you set aside a few hundred dollars a month as a personal R&D budget? Using the techniques discussed in I Will Teach You to Be Rich by Ramit Sethi, it's remarkably easy to automatically divert a certain amount of your monthly income into an account earmarked for Personal R&D. That money can then be used-guilt-free-to purchasing books, taking courses, acquiring equipment, or attending conferences: anything that will improve your skills and capabilities.

Personal finance gurus might disagree with me here, but I think having a robust Personal R&D budget is more important than maximizing your savings. I'm all for having a well-funded emergency savings account and "paying yourself first" to ensure you're saving enough for future needs, but savings can only get you so far.

Investments in improving your personal skills and capabilities can simultaneously enrich your life and open doors to additional income sources. New skills create new opportunities, and new opportunities often translate into more income.

Your ability to save is limited; your ability to earn is not.

Here's a simple planning exercise that will help you establish your own Personal R&D budget: what would have to be true if you were already dedicating at least 5-10% of your monthly income to research and experimentation, assuming your current income stays the same?

Any money-saving tip you find in good personal finance books or blogs can be used to fund your personal R&D account: for details, I recommend reading Your Money or Your Life by Vicki Robin and Joe Dominguez, as well as following Get Rich Slowly and The Simple Dollar.

All it takes is a little creativity and budgeting, and you'll be well on your way to funding your self-directed research and development laboratory.

Questions About 'Personal R&D'

• What are you doing to fund your personal R&D budget?
• How are you planning to invest your personal R&D funds?

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"If a man empties his purse into his head, no one can take it from him. An investment in knowledge always pays the highest return."

Benjamin Franklin

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